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2004-04-01 15:28:00
Embassy Panama
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						UNCLAS SECTION 01 OF 03 PANAMA 000748 



E.O. 12958: N/A




E.O. 12958: N/A

1. Summary: During a March 23-24 visit to Panama,
Ambassador Cresencio Arcos, Director for International
Affairs at the U.S. Department of Homeland Security pressed
the USG agenda on maritime security. At a meeting with
Panama's Minister of Government and Justice (MOGJ), Arnulfo
Escalona, the Minister discussed the GoP's bilateral security
agenda with the USG and broader national policies, including
Panama's desire to be a Container Security Initiative (CSI)
country. Arcos emphasized the need to stamp out corruption
to aid in getting CSI. Escalona reaffirmed the GoP's close
and continuing relationship with the United States and
updated Arcos on Panama's efforts to comply with other USG
and international security initiatives. Arcos later
delivered a speech at a broadly attended dinner in which he
urged companies from the Colon Free Zone--the world's second
largest--to take a leading role in financial and maritime
security. He also visited Panama's key cargo and passenger
port facilities, and held an interview with a leading local
newspaper. End Summary.

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Meeting with the Minister of Government and Justice
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2. On March 23, Ambassador Arcos, accompanied by the DCM and
Econoff, met with MOGJ Escalona. Also attending were GoP
Public Security and National Defense Council (Consejo)
Executive Secretary Ramiro Jarvis, National Police (PNP)
Director Carlos Bares, Maritime Authority (AMP) Director
Bertilda Garcia, and AMP Deputy Director Capt. Luis Perez
Salamero. Ambassador Arcos opened by noting that the
landscape of terrorism was rapidly changing, and that
governments had to work aggressively to adapt and remain
innovative to be one step ahead of terrorists. He thanked
the GoP for its continued support in this effort. Minister
Escalona replied that Panama was and would remain a strong
partner to the United States in the aviation and maritime
security arenas, and this was the policy of the entire
Moscoso administration. To that end, there were two agendas
that the GoP followed--the specific U.S.-Panama bilateral
relationship and a general GoP security agenda.

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The Container Security Initiative: a GoP Priority
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3. In the bilateral arena, he said, the GoP was making every
effort to become a Container Security Initiative country. He
pointed to the extensive GoP support of a January 14-21 CSI
technical visit by DHS officials, and noted that the GoP was
still waiting for a formal report from that visit to
implement further improvements and move forward. He queried
on the status of the proposed Declaration of Principles (DoP)
for CSI, saying, "Tell me where to sign." (Note: The draft
agreement has been with DHS headquarters since March 1. Our
GoP interlocutors continue to press for a DoP status update
at every opportunity. End Note.) He observed that Panama's
law for privatization of ports hadn't contemplated security
oversight, and in essence, the GoP had given up this control
to the operators when the port concessions were granted to
private companies. He said the GoP deemed CSI as key to
regain effective sovereignty over the ports as well as
strengthening GoP institutions and offering a competitive
advantage to Panama,s maritime industry.

4. Ambassador Arcos replied Panama was a truly changed
place. He observed that the USG and GoP were much more than
just friendly nations, but had a healthy, cooperative
relationship. He said it was clear that Panama understood
its role as a strategically critical country, especially with
the new threat of terrorism. Given that 60% of world GDP is
in the Pacific basin, with all projections indicating an
increase, Panama's strategic importance could only grow.
Arcos mentioned that 20 countries are CSI certified and that
DHS is now looking at the second tier of developing nations,
of which Panama was included. Arcos said that the USG was
considering many issues for including a country in CSI, but
emphasized that "port integrity" that kept out corruption was
a major factor. CSI involved much more that signing
documents, he stressed.

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Other USG initiatives also highlighted: TECI, EXBS, PSI
-------------- --------------

5. Escalona said that a GoP inter-agency working group was
reviewing Panamanian law to determine compliance with the
Department of Commerce,s Trans-shipment Export Control
Initiative (TECI) and the Department of State's Export
Control and Related Border Security Assistance (EXBS)
program. He said the working group was to present a law
proposal to the Legislative Assembly before the summer that
would greatly improve the GoP's control of dual use items
entering, leaving and transiting Panama. Escalona added that
the GoP was reviewing ways to sign a Proliferation Security
Initiative (PSI) boarding agreement with the USG, and that it
was beginning to focus on cruise ship security, given the
rapid increase of port calls in the past two years, and asked
for our assistance to train Panamanian officials in this
area. (Note: The Embassy is currently working with GoP
entities to address this endeavor. End note.)

-------------- ---
International Ship and Port Security (ISPS) Code
-------------- ---

6. AMP's Salamero noted that the AMP was charged with
International Ship and Port Facility Security (ISPS) code
implementation for Panama. Beginning April 15 he said, the
AMP would begin to review port security plans for Panama's
major ports, including the Panama Canal. He added that 5500
Panama-flagged ships are subject to ISPS review. Of those,
the three GoP-designated Recognized Security Organizations
(RSO's) had approved 2200 security plans for ships and
another 800 are in the pipeline. He opined that Panama was
well ahead of other maritime states in its ISPS
implementation. Arcos reiterated the importance of ISPS
compliance, and noted that the July 1 deadline for
implementation was very firm. Salamero responded that for
this very reason, the GoP was requiring all Panama-flagged
vessels to turn in their ship security plans by May 1 to
avoid a bottleneck just before July. Arcos noted that the
movement of people across borders is a challenge, and alluded
to the USVISIT program, which will include biometrics for
passports. He urged the GoP to apply similar standards to
mariner documents.

Airport Security, Borders, and Migration

7. Escalona then moved to the general GoP security agenda,
saying that the GoP viewed the June 2003 semi-privatization
of the Tocumen International airport as a positive move to
strengthen security, as it would allow the airport to
undertake a $50 million renovation that would include
significant security upgrades, including suggestions made by
a March 10-17 Transportation Security Agency (TSA) team. He
noted that the GoP was working to strengthen its border
security by taking a strong stand against the Colombian FARC
in the Darien region. He said the GoP had regained control of
the Darien, professionalizing and increasing the PNP forces
there to keep the FARC from using the Darien as a safe haven.
Escalona added that the GoP coordinated closely with
Colombian counterparts to repatriate refugees as humanely as
possible, and was working hard to address narcotrafficking.
He said that USG support, such as a recent $1 million
allocation to help maintain the National Air Service's
helicopters, was integral in all these efforts and greatly
appreciated. Escalona finished by saying that the GoP was
revising its migration policy, including a census of illegal
immigrants in Panama, passing laws to stop child pornography
and clamping down on prostitution abuses--this latter
initiative to address concerns about trafficking in persons.

8. In a press conference following the meeting, Ambassador
Arcos emphasized the positive relationship between the two
countries, noting it was a solid based on which to build to
confront threats. He added that Panama and the Canal were
strategically important, and underlined the importance of
striking a balance between security and open commerce.

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Speech to the Users Association of the Colon Free Zone
-------------- --------------

9. Immediately after, Ambassador Arcos addressed the Colon
Free Zone (CFZ) Users Association, which represents the
majority of companies present in the world,s second largest
free zone, on the topic of the new security stance of the
United States and its implications for Panama. He noted that
Latin America was much affected by changes in U.S. security
and gave an overview of DHS operations. He observed that 13%
of U.S. maritime commerce passes through the Panama Canal,
and lauded the GoP's counterdrug cooperation. He noted that
the recently announced U.S-Panama Free Trade Agreement
negotiations would enhance respect for the rule of law in
Panama and would ensure strong and accountable institutions
of government. He exhorted the CFZ to be a global standard
bearer in the areas of financial and transportation security.

-------------- -
Review of the Canal and Ports, PVSA, CSI Redux
-------------- -

10. On March 24, Ambassador Arcos participated in an
overflight of the Panama Canal and its installations.
Afterwards he visited Atlantic-side ports including Panama
Ports Company,s Cristobal passenger and cargo installations,
the Colon 2000 passenger terminal, and the U.S.-owned
Manzanillo International Terminal (MIT) for cargo. Upon
return to Panama City, Ambassador Arcos also visited the Fort
Amador cruise ship, hotel, and shopping complex. MIT
managers noted that while the privatized ports in Panama were
prepared to shoulder the costs of CSI implementation, it was
important to keep in mind that only 70,000 containers that
were transshipped (off-loaded and then onloaded again) in
Panama actually were destined for the United States, and of
those, more than 80% originated from CSI-certified ports. In
addition, they observed that Panama was the country of origin
of perhaps only 20,000 more containers. Ambassador Arcos
reiterated that CSI considers many factors, not just
container volumes, and highlighted the need to stamp out
corruption to maintain port security integrity. The cruise
ship terminal operators expressed their interest in Panama,s
designation as a distant foreign port under the Passenger
Vessels Services Act (PVSA), claiming that the designation
could significantly increase the number of port calls to
Panama and thus significantly benefit the tourism sector.
Arcos replied that the Department of Commerce continues to
analyze the economic impact of the change and that the USG
would consider options soon.

Interview with El Panama America Newspaper

11. Though Ambassador Arcos discussed the broad maritime
agenda in a one-on-one interview with El Panama America, a
leading Panamanian daily, the published article focused
entirely on the background of the CSI program and Panama,s
potential to be included. The article noted that Arcos had
visited Panama,s key ports and his observation that there is
no set timetable for CSI implementation for Panama.

12. Ambassador Arcos did not have the opportunity to clear
this cable.